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Gas And Electricity: Economic Pricing

Volume 416: debated on Wednesday 28 January 1981

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2.46 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what steps they are taking to give relief to industries which are large users of gas or other fuel.

My Lords, British Gas are already charging only 75 per cent. of the full gas oil equivalent price for renewed contracts for firm supplies, and are reducing the price for new customers to this level after the first year of supply. The electricity boards will advise their customers on how to obtain the maximum possible benefit from the available flexibility in their tariffs. International action includes a United Kingdom initiative within the European Community to press the United States to correct its underpricing of oil and gas. In addition, the Secretary of State for Energy has asked the British Gas Corporation and the electricity supply industry (in the context of its review of the bulk supply tariff) to consider whether further assistance is possible within the framework of our economic pricing policy.

My Lords, I am grateful to the noble Earl for his Answer, which is very helpful so far as it goes. However, is he aware that it is seven months since the Government started the monitoring process and we are really no nearer a conclusion of the matter that was raised then than we were seven months ago? It has been a further seven months in which British industry has been severely affected by the high price of energy in relation to its competitors. Is he further aware that in respect of this argument there seems to be little difference between the Government, as expressed by the Secretary of State in another place last week, the CBI and the TUC that it is the big users of fuel, particularly gas, that are affected? Would he not, therefore, encourage the introduction of discounts for volume, which are common in most other countries, and help British industry to get back to profitability and to maintain high levels of employment?

My Lords, I gave a rather longer initial reply than is my custom because I wished to indicate to the noble Lord exactly how much we have done. It seems to me that we have done a very great deal within the context, which, as I say, is so necessary, of overall economic pricing.

My Lords, is the noble Earl aware that the price of gas to the North Staffordshire pottery industry is having a terrific effect on that industry? For example, as regards one of the most famous firms in that area, the increase will cost that firm three-quarters of a million pounds more and thus put it in a disadvantageous position with the rest of its competitors throughout the world. The pottery industry should receive particular attention from this House and we cannot be dragged along by laws over which we have no sovereignty.

My Lords, I do not think that it is a question of being dragged along by laws over which we have no sovereignty: it is a question of being dragged along by the international prices of energy which this country, like all industrial countries, cannot altogether escape. However, as I said in my original Answer, we are monitoring closely where there may be a direct competitive disadvantage and that seems to be the right way to proceed.

My Lords, I should like to ask the noble Earl the Minister whether he would regard it as another Question entirely if I were to ask him what relief the Government are proposing to give to ordinary users of gas and fuel who are finding the prices quite exhorbitant?

My Lords, technically I think that it would be another Question, but it is always difficult to resist the noble Lord, Lord Wells-Pestell.

The answer is that domestic consumers are already paying well below clearing prices for energy.

My Lords, are not the large users of electricity in the energy-intensive British chlorine industry now having to pay between 50 and 100 per cent. more for their electricity than their Western European competitors? Does that not account largely for the fact that in some cases they are able to maintain exports only by selling at a loss? Should not the Central Electricity Generating Board, as a state monopoly, forthwith reduce the prices that are charged to such consumers without awaiting the outcome of the NEDC energy task force that has just been set up?

My Lords, as my original reply indicated, the electricity boards will advise customers how to take advantage of existing and flexible tariffs. But, on the question of the chlorine industry, I should point out that that industry, like the pottery industry, cannot escape the consequences of increases in energy prices worldwide.

My Lords, will the noble Earl bear in mind always the overriding interest of the British housewife in the conservation of supplies and the non-depletion of our reserves, and that anything done to cheapen the price of industrial gas and to promote its largescale use is directly contrary to the interest of the domestic consumer?

My Lords, I am grateful to the noble Earl for a subtle point, which I hope the House will study carefully.

My Lords, on that subtle point, may I say that the domestic housekeeper will not have the money to pay the rent if her husband does not get a job in the pottery industry?

My Lords, I do not want to appear ungrateful to the noble Earl because he put himself out to give a great deal of information, but what is important is the conclusion of the monitoring process. Can he give any indication about when the task force will conclude its work, and how quickly after that the Government can come to a conclusion?

My Lords, I think it is right that the task force should try to cover definite differences of view between industries and between some industries and the Government. I am advised that it will come to its conclusions by 4th March, so I think that we are getting on with it.

My Lords, can the noble Earl confirm that it is still the Government's intention to increase the prices of gas and electricity by 10 per cent. in excess of the going rate of inflation for the next three years?

My Lords, the going rate of inflation and the prices of energy are not linked, as—and I say this with respect to him—the noble Lord very well knows.

My Lords, I think the House will agree that it is time we moved on.